On December 11, 2006 OJSC North-West Telecom received the decision of the Russian Federal Tax Service’s Interregional Inspection Office for the Largest Taxpayers No. 7 on the results of the on-site scheduled inspection of activities of the Company for the years 2003 - 2004.

The tax inspection at OJSC North-West Telecom lasted from August 2 through November 9, 2006. Based on the inspection results, the Interregional Inspection Office issued the decision on the tax liability of the Company. The total amount of the tax authorities’ claims against OJSC North-West Telecom is 583.6 million rubles, including 436.3 million rubles as the claim for additional taxes and 147.3 million rubles as fines and penalty interest.

OJSC North-West Telecom disagrees with the conclusions of the Interregional Inspection Office for the Largest Taxpayers No. 7 on the tax inspection results and tax claims and will defend the case in the court in accordance with effective Russian legislation.

OJSC North-West Telecom is a law-abiding taxpayer and the management of the Company believes it will be able to prove that the tax authorities’ claims are unjustified.